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Potential LTCG issues when selling property below Fair market Value

Tax queries 392 views 2 replies

Sanjay Sanjeevan

7 Points Posted on 24 July 2022

Hi,

I have a plot of land purchased long back for which the current registration value (Fair Market Value) is 20 Lakhs. But as I haven no buyers for it at even the FMV so I am making a distress sale for Rs. 10 Lakhs.

I understand that since the registration will happen at 20 Lakhs and stamp duty will also be paid at that price, I will have to pay LTCG also at the rate of 20 Lakhs and I am ok with it. But since I will be receiving only 10 Lakhs to my account, will the IT dept deem that the remaining 10 Lakhs was received as cash and hence penalize me for it ? How can I avoid this situation ?

Regards,

Sanjay

Replies (2)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211705 Points Posted on 25 July 2022

First they will scrutinize buyer and check if any cash was withdrawn from their bank accounts.

If yes, you will be also in scrutiny..... otherwise not much harassment...

CA PARTH SHAH

In Practice

1951 Points Posted on 26 November 2022

No need to do registry of 20 Lakhs. Yo ucan sell at Rs 10 lakhs. However in ITR, you will have to disclose that the registry value of the plot is Rs 20 lkahs and pay capital gains as per Rs 20 Lakhs only.